By Victoria Sinclair, Guest Columnist
A nation simply cannot tax and spend its way to prosperity. Federal legislators and the President must stop fueling the flames and exercise spending restraint.
It is imperative that federal legislators and the President take the issue of the federal deficit seriously and act now. Generations of American politicians have more or less ignored the deficit (the amount by which our government overspends its revenue in any given year), leading to a federal debt that is maxing out Congress’s debt ceiling. Current spending levels are unsustainable and increasing taxes on individuals will not fix the problem, as a heavier tax burden would just further hammer away at Americans’ pocketbooks. Raising taxes on businesses isn’t the answer either. That would only exacerbate the already out-of-control inflation issue, as tax increases would simply be passed onto the consumer in the form of higher prices.
No, the solution is the federal government must exercise spending restraint. Sadly, experience tells us that it is easier for politicians to increase spending rather than reduce government budgets. When more dollars are spent, they often fund new government jobs or new benefits received by some members of the public, creating an instant constituency of supporters. What is often forgotten in those circumstances is the taxpayers who are footing the bill for the programs. As we rapidly approach the debt limit passed in 2021, there doesn’t seem to be a great likelihood that our federal officials will take the prudent course of action.
Senate Democrats and the President have both indicated disinterest in the Limit, Save, and Grow Act that was passed by House Republicans who intend to place new limits on spending and implement other budget reforms. The collective failure of Washington, D.C. to take the federal deficit seriously will further damage the country. The current federal debt stands at more than $31 trillion. This amounts to nearly $95,000 of debt per citizen, and almost $250,000 of debt per taxpayer. That federal debt represents over 120% of the nation’s Gross Domestic Product.
The 2022 federal budget included over $300 billion in mandatory spending just to cover the interest payments on America’s debt. With interest rates and the federal debt both continuing to climb, the amount of money required to service that debt will only continue to become a larger and larger portion of the federal budget.
This is highly problematic. As the spending required to fund entitlement programs like Medicare is on the rise too, the percentage of the budget remaining for discretionary spending will dwindle. In effect, the slices of the budget pie that remain after funding entitlements and interest payments on our debt will keep growing smaller over time if nothing changes, until we reach a point where there are no financial resources left for critical responsibilities like providing for the national defense.
If you’re curious, when President Biden first took office as a Senator from Delaware in 1973, Medicare, Medicaid, Social Security, and interest on the federal debt combined to make up approximately 28% of America’s budget. Today, those four categories have grown to consume 57% of our country’s annual spending.
A nation simply cannot tax and spend its way to prosperity. It is time that federal appropriators make some tough budgetary decisions so that our children, grandchildren, and great-grandchildren do not inherit an even worse problem than the unsustainable debt situation we currently face. Perhaps current leaders did not start this fire, as Billy Joel may suggest, but it’s high time to make an effort toward putting it out, rather than continuing to pour gasoline onto the flames.
Victoria Sinclair is the Government Relations Director for Iowans for Tax Relief.